German lawmakers adopt contested pensions reform

BERLIN--German lawmakers approved Friday a major pensions overhaul, criticized by many, including within Chancellor Angela Merkel's coalition, as making little economic sense in a rapidly aging country.

The new rules will allow some workers to retire at the age of 63, while the norm of 67 is being progressively phased in for workers in Europe's top economy after a 2007 change.

Together with an improvement in pensions for mothers whose children were born before 1992, the reforms are set to cost Merkel's left-right "grand coalition" 60 billion euros (US$82 billion) up to 2020.

Merkel defended the reforms Thursday as a "fair policy," while Social Democrat Labour Minister Andrea Nahles called it "just and necessary" during Friday's debate in the Bundestag lower house of parliament.

Alongside a national minimum wage and energy market reform, the new pensions plan is one of the biggest and thorniest projects tackled by Merkel's five-month-old government so far.

And wrangling over the nitty gritty between Merkel's conservatives and her Social Democrat (SPD) junior partners continued right up to the start of the week.

In the end it won the backing of 460 MPs, while 64 voted "no" with 60 abstentions.

Germany's leading economic institutes argue the changes are a step in the wrong direction.

"I find that disastrous," Ulrich Grillo, head of the BDI Federation of German Industries said, a day before the parliamentary vote. "It's all the opposite of what we should be doing."

Critics, including from abroad, have also pointed to the paradox of Germany now lowering its retirement age after having pressed its partners in Europe during the debt and financial crisis not to permit the same.

Even former top Social Democrats, such as ex-chancellor Gerhard Schroeder have condemned the reform.

A poll for ARD public TV Friday, however, showed that 73 percent of Germans backed retirement at 63 for some people, compared to 22 percent who said it was a move in the wrong direction.